Osborne increases VAT rate to 20%

Chancellor George Osborne increased VAT from 17.5% to 20% and cut welfare spending as he moved “decisively” to tackle Britain’s record debts.

Child benefit and public sector pay will be frozen and 25% cut from public service spending – but alcohol, tobacco and fuel will escape tax hikes.

Unveiling his first Budget to MPs, Mr Osborne said “tough but fair” action on debt was “unavoidable”.

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